June 21, 2008 / 12:05 AM / 12 years ago

Air Force to seek new tanker bids: outgoing boss

WASHINGTON (Reuters) - The ousted head of the U.S. Air Force said Friday he expected the service to seek new bids for midair refueling aircraft from Boeing Co and Northrop Grumman Corp after federal auditors faulted the selection process for a $35 billion program.

A Boeing KC-135R tanker (L) is seen in an undated handout photo. REUTERS/U.S. Air Force/Handout

The service probably would miss its 2013 goal for putting the new tankers into use, said Michael Wynne, forced to resign as Air Force secretary by Defense Secretary Robert Gates.

“I would say there’s going to be a lot of fear in the system,” Wynne, the service’s top civilian, told reporters on his last day in office. At issue, he said, would be “can we ever do this right?”

On Wednesday, the Government Accountability Office faulted the contract awarded nearly four months ago to the team of Northrop Grumman (NOC.N) and Airbus parent EADS EAD.PA, and recommended a new competition be held.

Boeing Co (BA.N), the losing bidder, successfully challenged the award with the GAO, a nonpartisan congressional watchdog. GAO said the Air Force had made “significant errors that could have affected the outcome of what was a close competition.”

On February 29, the Air Force announced plans to buy 179 refueling tankers based on the A330 built by Airbus, Boeing’s passenger plane-maker rival. Valued at $35 billion over 15 years, this was to be the first of three purchases of a new fleet potentially costing $100 billion or more.

Northrop said Friday it remained under Air Force contract and called for speedy resolution of the issues raised by GAO.

“We respect the GAO process and are confident the Air Force will appropriately address its recommendations,” said Paul Meyer, Northrop Grumman’s tanker program manager.

Wynne, forced to resign June 5 over nuclear and ballistic missile safety oversights, said the Air Force in effect had leaned over backward to maintain competition after a botched sole-source plan to lease and then buy modified Boeing 767s as tankers.

That deal collapsed four years ago after it emerged that Darleen Druyun, a top Air Force procurement official later imprisoned on conflict-of-interest charges, was simultaneously negotiating a $250,000-a-year missile-defense job at Boeing.

“We wanted to make sure we had competition,” Wynne said of the selection process faulted by GAO. “It’s very hard now because the industrial base in America is shrinking.”

“I think getting a competitor to hang in there was one of our early-on responsibilities because we felt like that was the best way to get the best price for the government and the best value for the taxpayer,” he added.

Pressed on what went wrong, Wynne said, “I think we made it overly complex.” He said a “flyoff” competition was worth considering.

Richard Aboulafia of Teal Group, a Fairfax, Virginia, aerospace consultancy, said a flyoff involved evaluating the performance of prototypes equal or close to the tankers being built.

Such an approach likely would favor Northrop, he said, because “they’re a little closer to having a fully representative plane.”

An Air Force spokeswoman said on Friday the service was continuing to impose a “stop-work” order on the Northrop program while it mulls the GAO recommendations. The Air Force has 60 days from Wednesday to respond.

Wynne said the Air Force would seek GAO clarification on what he called certain “subjective” criticism.

The service then “hopefully” would put out a quick, fresh request for proposal “that will allow them (the bidders) to use all the information they’ve already produced,” he said.

Of the 2013 goal for starting to fly new tankers, which are used to refuel warplanes in midair, Wynne said: “There’s almost no way to do that in the face of a straightforward delay in the start date.”

After the GAO ruling, Northrop said it had put off indefinitely a planned June 28 groundbreaking for facilities in Mobile, Alabama, designed to produce tankers from the Airbus

A330.

Wynne said he had been increasingly “strident” in clashes in the past year with Gates, his boss as defense secretary.

“We advised the secretary — I did — that I was not with him on the F-22 budget, for example,” he said, referring to the top-of-the-line Lockheed Martin Corp (LMT.N) fighter aircraft. The Air Force has pushed to extend the production line. Gates had left the decision to the next administration.

Editing by Phil Berlowitz and Steve Orlofsky

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